Poland 28 November 2008 Supreme Court (Umbrellas case)
[Cite as: http://cisgw3.law.pace.edu/cases/081128p1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: V CSK 261/08
CASE HISTORY: Unavailable
SELLER'S COUNTRY: China
BUYER'S COUNTRY: Poland
GOODS INVOLVED: Umbrellas
POLAND: Supreme Court 28 November 2008
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/137],
CLOUT abstract no. 1304
Reproduced with permission of UNCITRAL
The Polish defendant, entered into business negotiations with a Chinese company aiming at a contract for the sale of machines to produce “dumplings”. What eventually came out of this business relationship was however a contract for materials such as umbrellas, pens and wastebaskets that the Polish party ordered from the Chinese seller. The details of the contract were principally contained in a pro forma invoice of 4 May 2003, including a FOB clause determining city N. in China as the place of delivery. After the goods were shipped to Poland, it turned out that all the umbrellas were defective. The representative of the seller, during its visit to Poland, acknowledged this and promised to replace the goods. Additionally, it offered reduced prices for another shipment of materials next year. The parties agreed that the shipment would be delivered to Poland, since the representatives of the Polish party declared they did not want to travel to China to carry out the inspection. E-mail negotiations followed in which the parties discussed various options. Eventually, in the pro forma invoice of 17 March 2004, the Chinese seller indicated city N. in China as the place of loading and city W. in Poland as the place of destination. The terms of payment were also established, with a 50 per cent of the price to be paid after the inspection of the goods. The pro forma invoice also carried a FOB (city N.) clause.
After negotiations between the parties as to the time when the payment should be made (i.e. when the goods were dispatched from China or delivered to Poland), the materials eventually arrived to city H. in Europe. Because of the insufficient quality of the umbrellas, the buyer refused to take delivery and to pay part of the price. Unable to sell the goods in Europe, the Chinese seller ordered them to be shipped back to China.
The seller sued before a Polish court, requesting the remaining part of the price and the damages for the costs incurred as a result of the goods being stored in city H. and for the cost of shipping them back to China. The dispute centred around a question whether the parties agreed on the place of delivery in city W. (Poland) or N. (China), and whether the payment depended upon the inspection carried out by the buyer. Applying Article 8 CISG in order to reconstruct the true intent of the parties, the court of first instance (Circuit Court) compared the pro forma invoices of the contract in question (17 March 2004) with the invoice of the previous parties’ agreement (4 May 2003), taking also all other circumstances into account. It concluded that the parties consciously intended to depart from the previous terms and to determine city W. in Poland as the place of delivery, while the FOB (city N.) clause was found to be irrelevant. Moreover, the Circuit Court underlined that the FOB clause does not regulate the time of payment of the price, and so its applicability in the case at hand could not have changed the outcome of the dispute anyhow. In accordance with Article 58 CISG, the payment of the price depends primarily on the parties’ agreement, i.e. in this case the price was to be paid after the inspection of the goods in Poland. Since the inspection in city H. revealed defects in the goods and no inspection was ever carried out in Poland, the buyer was not obliged to pay the price, as provided for in Article 58(3) CISG. This also made the claim for damages unjustified.
The judgment was reversed by the Court of Appeals, which assessed all the circumstances concerning the conclusion of the contract, taking into account Articles 8 and 9 CISG, and found the pro forma invoice of 4 May 2003 as inadmissible evidence. The Court held that in the new contract the FOB clause had been agreed upon by the parties and that it prevailed over other arrangements. This in turn meant that the inspection of goods was supposed to be carried out in China, before the goods were shipped. In light of Article 53 CISG, the payment of the price thus became due. The compensation was however not awarded as unsubstantiated.
The Supreme Court reversed the decision of the Court of Appeals on procedural grounds. In particular, it held that the Court of Appeals wrongly rejected the pro forma invoice of 4 May 2003 as inadmissible evidence. Since this was crucial in order to establish the content of the parties’ agreement, the case was remanded to the Court of Appeals for further consideration of that document. The Supreme Court also observed that while under Article 9 CISG the parties are free to incorporate Incoterms clauses into their agreement, they are also free to modify these terms in their contract, both expressly and tacitly. The court further underlined that the guiding principles for the interpretation of the parties’ agreement are contained in Article 8 CISG.Go to Case Table of Contents
APPLICATION OF CISG: [-]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
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CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Polish): Republic of Poland website <http://www.sn.pl>
CITATIONS TO COMMENTS ON DECISION
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